Advantages of a Chapter 13 Bankruptcy

10 Aug Advantages of a Chapter 13 Bankruptcy

A chapter 13 bankruptcy is a court supervised repayment plan. It is a wonderful vehicle for re-paying some of your debts, reorganizing your monthly payments and restructuring your credit. Any individual who has an income and who has unsecured debts of less than $336,900 and secured debts of less than $1,010,650 can file.

Unlike a Chapter 7 bankruptcy, you will never have any of your property taken by the trustee to pay your debts.

The amount of your income and monthly expenses will determine whether the repayment plan will last three or five years.

Among the advantages of a Chapter 13 is the ability to re-pay mortgage arrearages and thereby stop a foreclosure! You can spread the amount you are behind on your mortgage over the length of the plan, and so long as you keep up with your normal monthly house payments, save your home from foreclosure.

In my opinion, the greatest advantage of a Chapter 13 bankruptcy is its flexibility. You can, with appropriate court approval, change the plan as necessary at any time. Thus, if you get hit with more medical bills, or your income goes up, you can change the plan. You can refinance your house during the plan period, or even sell it and dismiss the bankruptcy altogether. And, you can always convert it to a Chapter 7 if appropriate.

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Douglas Jacobs is a California bankruptcy attorney and partner in the Chico law firm of Jacobs, Anderson, Potter & Chaplin. Since 1988, Mr. Jacobs has taught Constitutional law and Debtor-Creditor/Bankruptcy law at the Cal Northern School of Law. He has served as Dean of Students since 1994. He is a frequent lecturer on the subject of consumer bankruptcy law, and has spoken at both state and national levels.
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